Prosecutors demand info on Merck, Endo contracts with PBMs


The feds aren’t just looking into Johnson & Johnson’s relationships with pharmacy benefits managers. The U.S. Attorney’s Office in New York’s Southern District has its eye on Merck & Co. and Endo International, too.

Merck and Endo each disclosed civil investigative demands from the U.S. Attorney in their first-quarter filings with the Securities and Exchange Commission. In Merck’s case, the feds are asking for documents on PBM contracts covering the migraine drug Maxalt and the erectile dysfunction drug Levitra, from 2006 to the present.

The demand involves “information relating to the Company’s contracts with, services from and payments to pharmacy benefit managers with respect to Maxalt and Levitra from January 1, 2006 to the present,” Merck said in its 10-Q filing. “The Company is cooperating with the investigation.”

In Endo’s case, the U.S. Attorney’s office wants information on PBM contracts covering Frova, also a migraine drug. “We are currently cooperating with this investigation,” Endo said in its filing. “We are unable to predict the outcome of these matters or the ultimate legal and financial liability, if any.”

The disclosures are similar to J&J’s, whose Janssen unit also received a demand for information about its PBM relationships. The company didn’t specify which drugs might be involved.

"The statement in the filing is accurate, and we are cooperating fully in the process," the company told FiercePharma in an email Tuesday. "We have nothing further to add at this point.”

Though pharma is no stranger to federal investigations, the emphasis on contracts with PBMs appears to be unusual. More common subjects have been potential Foreign Corrupt Practices Act violations and kickback probes. In recent years, PBMs have grown more aggressive about negotiating price-cutting deals with drugmakers, often trading exclusive access to formularies in return for deep discounts. Apparently, the Justice Department thinks such arrangements might run afoul of the False Claims Act, which was cited in J&J's SEC disclosure.

In recent months, the Justice Department has also demanded information and documents about drugmakers’ use of specialty pharmacies. Valeant Pharmaceuticals and its controversial relationship with Philidor Rx Services--subject to its own federal probe--appears to have kicked off prosecutors’ interest in those relationships. Horizon Pharmaceuticals is another company whose specialty pharmacy ties are under investigation.

- see the Merck 10-Q
- check out Endo’s filing

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